Interest rates have been at a low level for years – according to experts, they could become more expensive again in 2022. However, this depends on a combination of various factors.
The high inflation, the policy of the European Central Bank (ECB), the yields on federal bonds and mortgage bonds and currently also the economic uncertainty caused by the corona affect the interest rates for real estate loans. While it is normally the case that interest rates also rise in times of high inflation, this is not the case as of February 2022 – because the ECB does not officially plan to raise interest rates for the current year, according to the Süddeutsche Zeitung (SZ). Experts are nevertheless forecasting a change in interest rates for real estate loans for 2022.
Financial advisor suspects that the low-interest phase will end soon
The federal bonds, which are based on the interest rate level of the ECB, are currently yielding negative interest rates. The interest rates for real estate financing, which are not negative, are based on federal bonds, but were between 0.6 and 0.71 percent in mid-December. The SZ takes these values from data from the Association of German Pfandbriefmarken (vdp). The annual average for 2021 was 1.2 percent, which is very low compared to the average mortgage rate for 2009 (4.7 percent).
According to the SZ, financial advisor Max Herbst explains that the low-interest phase will soon end: “And then we will also have slightly increasing interest rates for building loans.” He expects an interest rate hike at the end of 2022 – provided the ECB has raised the key interest rate by then. Appropriately, Jens Tolckmitt, vdp General Manager, explains in a press release: “We have clearly bottomed out with interest rates […].” According to the SZ, he predicts an increase in interest rates for mid-2022 if inflation persists.
Experts: The coming interest rate hike will remain “foreseeably low”
The experts Roland Stecher from the Bremen consumer center and Michael Neumann, board member of the credit broker Dr. Small, according to the SZ, forecast rising interest rates. Due to the tension between the pandemic, inflation and ECB policy, however, large jumps are not to be expected, and according to Stecher the interest rate level will remain “foreseeably low”. Neumann joined Tolkmitt and predicted slightly rising interest rates. However, he added: “Interest rates will only move in a narrow corridor.”
Only Herbst gave exact figures for a possible interest rate level, which is counting on interest rates for real estate loans of around 1.5 percent.
In addition to interest rates, real estate prices will continue to rise in 2022
According to the vdp, in addition to the loan interest rates, the house prices rising, with the increase peaking in 2021 at 11.3 percent. ING cites data from DZ-Bank, according to which real estate prices will rise by 7.5 to 9.7 percent this year. Accordingly, buyers will continue to have to take out higher loans for the purchase of real estate – according to the SZ, the average amount for real estate loans is currently 310,000 euros.
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